Investors should accumulate reopening plays during this month of heightened uncertainty and volatility, as Covid-19 cases are expected to peak in October and stabilise thereafter, says UOB Kay Hian Research analyst Jonathan Koh.

In an Oct 1 note, Koh is maintaining “overweight” on S-REITs, with “buy” calls on hospitality REITs Ascott Residence Trust (ART), with a target price of $1.16; and Far East Hospitality Trust (FEHT), with a target price of 71 cents. 

Koh is also recommending “buy” on retail REITs Frasers Centrepoint Trust (FCT), with a target price of $3.06); and Lendlease Global Commercial REIT (LREIT), with a target price of $1.01. 

See: Suntec REIT most undervalued commercial S-REIT, says DBS

The FTSE ST Real Estate Investment Trusts Index (FSTREI) corrected 1.1% in the past two weeks, writes Koh. 

The government has also selectively tightened Covid-19 measures from Sept 27 to reduce the strain on the healthcare system.

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Finance Minister and co-chair of the Multi-ministry Task Force Lawrence Wong has promised that reopening will resume once the healthcare system has stabilised.

The top outperformers include diversified REITs like OUE Commercial REIT (OUECT), Capitaland Integrated Commercial Trust (CICT) and Suntec REIT (SUN), which gained 2.2%, 0.7% and 0.5% respectively. 

Retail REITs with exposure to downtown malls, such as SPHREIT and LREIT, gained 1.6% and 1.2% respectively. 

Logistics REIT Frasers Logistics and Commercial Trust (FLT) gained 2.0%. 

Keppel Pacific Oak US REIT KORE gained 1.9% due to its focus on and growth from suburban office and business park properties in Super Sun Belt and 18-hour cities. 

The sell-down on reopening plays has continued, says Koh. The top underperformers are hospitality REITs CDL Hospitality Trusts (CDREIT) and ART, which declined 7.1% and 4.6% respectively. 

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S-REITs with exposure to retail properties overseas, such as Sasseur Real Estate Investment Trust (SASSR), Mapletree NAC Trust (MAGIC), CapitaLand China Trust (CLCT) and United Hampshire US REIT (UHU), declined 3.9%, 3.5%, 3.1% and 2.9% respectively. 

Industrial REITs ESR REIT (EREIT), Ascendas REIT (AREIT) and Mapletree Industrial Trust (MINT) corrected by 4.1%, 2.5% and 2.5% respectively.

Photo: Bloomberg